Effects and Causes of Cost Overrun Factors in Pakistan

Construction Industry

INTRODUCTION
1.1. The Study Overview
Cost is a prime factor during the project existing period and it can
be treated as important consideration of any strategy and the
projects accomplishment. A project otherwise completed may not
be regarded as a successful endeavor until and unless it satisfies
the cost limitations applied on it. Cost overrun is very common
aspect and its apart of relatively all projects in construction
industry. It can be simply illustrate as when the entire cost of the
project exceeds from the beginning estimated cost.
Pakistan

has

an

ironic

antiquity

of

impressive

construction

enterprises. The Minar-e-Pakistan, Badshahi Mosque, Islamia College

Civil Lines Lahore, Hiran Minar, Faisal Masjid, IQBALS TOMB, MAZARE-QUAID, Lahore Fort and the Shalamar Gardens are few examples
of these expertises.
As Pakistan is now considered among the developing countries, so
that the construction industry plays an important role in the
economic growth of Pakistan. Alike so many other developing
countries, Pakistan is also fronting serious project delays in
construction industries. Completion of a construction projects
contributes in the economic development by the effective use of
cost and time as a whole, which results in saving the cost for the
country (Aibinu, A. and G. Jagboro 2002).
In Pakistan, today most of the projects are delayed due to the cost
overrun. One of the most frequent example is of Neelum-Jhelum
Hydropower Project which was delayed for 7-8 months due to the
cost

that

had

been

paid

by

the

government

of

Pakistan

(thenews.com/neelum-jhelum-hydropower-project-delayed). Another
example of New Islamabad Airport which was planned to construct
in April 2007 and it was expected scheduled to be completed by
2010 at an initially cost of Rs. 37 Billion. And now its completion is
expected before march 2017 with an estimated cost of Rs. 95 Billion
(http://www.dawn.com/news/1175543) .
This Research will identify the major effects and causes of cost
overrun in construction industry of Pakistan and minimize that
factors which are involved.

1.3. Objectives of the Research

The purpose of this study is to highlight the important influences
that are subsidizing to the cost overrun in construction projects in
Pakistan. To complete this purpose, following objectives

are

established which may comprise;

1. Recognizing the causes of cost overrun and their effects for
construction projects.
2. Recognizing the associated accountable parties to the roots of
cost overrun.
3. Promoting suggestions and recommendations to reduce or to
avoid cost overrun.

1.4. Research Questions

Question: Why this research has been established?
Answer: Most of the construction projects in Pakistan suffer time and
cost overrun.
Question: What does the research try to achieve?
Answer: To contribute knowledge the problems of cost overrun their
causes and their effects on country success.
Question: Who will benefit from this research?

Answer: Stake Holders in the construction industry.

Question: How can the research be done?
Answer: Literature review, Research Methodology, distribution of
questionnaires, and desk study on building construction Projects.

1.5. Theoretical Framework

This study focused on the factors of cost overrun and propose new
recommendations for handling and controlling cost overrun in
Pakistan construction industry.
Chapter One: This chapter of this research is introduction, which
gives a general overview about the cost overrun and discusses the
need of the study as it contains background study and primary
objectives and introductory remarks.
Chapter Two: This chapter contains some published works for the
study of cost overrun issues, effects and causing factors. This
chapter presents some definitions of cost overrun, causes of cost
overrun, effects of cost overrun, Cost management, Phases in
Building Construction for Cost Management, how to estimate of cost
of construction project at different stages, the way to minimize the
exceeding cost.
Chapter Three: This chapter discusses the scope and limitations,
adopted methodology for the completion of this study. It provides
details of various analyzing approaches used for data analysis
together with the data collection strategy used.
Chapter Four: This chapter explains the descriptive analysis of cost
overrun

and

contract

amount

relationship

and

questionnaire

responses and some similar studies carried out by other countries,

briefly discussion about the stakeholders in Pakistan construction

industry.
Chapter Five: The final chapter discusses about the conclusion
achieved from this study and recommendation to minimize the
effects of cost overrun.

1.6. Research Method

Date used in this research will be derived from both primary and
secondary resources. The primary data will be obtained by survey
method, by the use of questionnaire survey by the professionals
that included; Architects, Civil Engineers, Quantity Surveyors,
construction mangers and project managers who are currently
involved in Pakistan construction industry. Few interviews will also
be held with key people of the project. While the secondary data
was derived from the existing literature, archival record, published
and unpublished literature. After so many literature reviews, a lot of
delay

factors

questionnaire.

Refrences

were

extracted,

that

are

directly

based

on